Managing Your Practice

The SGR is abolished! What comes next?

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Option 2: APMs. Physicians can earn higher fees by opting out of MIPS fee for service and participating in APMs. The law defines qualifying APMs as those that require participating providers to take on “more than nominal” financial risk, report quality measures, and use certified EHR technology.

APMs will cover multiple services, show that they can limit the growth of spending, and use performance-based methods of compensation. These and other provisions will likely continue the trend away from physicians practicing in solo or small-group fee-for-service practices into risk-based multispecialty settings that are subject to increased management and oversight.

From 2019 to 2024, qualified APM physicians will receive a 5% annual lump sum bonus based on their prior year’s physician fee-schedule payments plus shared savings from participation. This bonus is based on patient volume, not just revenue, to make it easier for ObGyns to qualify. To make the bonus widely available, the Secretary of Health and Human Services must test APMs designed for specific specialties and physicians in small practices. As in MIPS, top APM performers will also receive an additional bonus.

To qualify, physicians must meet increasing thresholds for the percentage of their revenue that they receive through APMs. Those who are below but near the required level of APM revenue can be exempted from MIPS adjustments.

  • 2019–2020: 25% of Medicare revenue must be received through APMs.
  • 2021–2022: 50% of Medicare revenue or 50% of all-payer revenue along with 25% of Medicare revenue must be received through APMs.
  • 2023 and beyond: 75% of Medicare revenue or 75% of all-payer revenue along with 25% of Medicare revenue must be received through APMs.

Who pays the bill?
Medicare beneficiaries pay more

The new law increases the percentage of Medicare Parts B and D premiums that high-income beneficiaries must pay beginning in 2018:

  • Single seniors reporting income of more than $133,500 and married couples with income of more than $267,000 will see their share of premiums rise from 50% to 65%.
  • Single seniors reporting income above $160,000 and married couples with income above $320,000 will see their premium share rise from 65% to 80%.

This change will affect about 2% of Medicare beneficiaries; half of all Medicare beneficiaries currently have annual incomes below $26,000.1

Medigap “first-dollar coverage” will end
Many Medigap plans on the market today provide “first-dollar coverage” for beneficiaries, which means that the plans pay the deductibles and copayments so that the beneficiaries have no out-of-pocket costs. Beginning in 2020, Medigap plans will only be available to cover costs above the Medicare Part B deductible, currently $147 per year, for new Medigap enrollees. Many lawmakers thought it was important for Medicare beneficiaries to have “skin in the game.”

The law cuts payments for some providers
To partially offset the cost of repealing the SGR, MACRA cuts Medicare payments to hospitals and postacute providers. It:

  • delays Disproportionate Share Hospital (DSH) cuts scheduled to begin in 2017 by a year and extends them through 2025
  • requires an increase in payments to hospitals scheduled for 2018 to instead be phased in over 6 years
  • limits the 2018 payment update for post-acute providers to 1%.

The law extends many programs
These programs are vital to support the future ObGyn workforce and access to health care. Among these programs are:

  • a halt to the Centers for Medicare and Medicaid Services (CMS) policy on global surgical codes. The law reinstates 10-day and 90-day global payment bundles for surgical services. This directly helps ­ObGyn subspecialists, such as urogynecologists and gynecologic oncologists.
  • renewal of the Children’s Health Insurance Program (CHIP), which provides comprehensive coverage to 8 million children, adolescents, and pregnant women across the country
  • establishment of a Medicaid/CHIP Pediatric Quality Measures Program, supporting the development and physician adoption of quality measures, including for prenatal and preconception care
  • funding for the Maternal, Infant, and Early Childhood Home Visiting Program, helping at-risk pregnant women and their families to promote healthy births and early childhood development
  • funding for community health centers, an important source of care for 13 million women and girls in all 50 states and the District of Columbia
  • funding for the National Health Service Corps, bringing ObGyns and other primary care providers to underserved rural and urban areas through scholarships and loan repayment programs
  • funding for the Teaching Health Center Graduate Medical Education Payment Program, enhancing training for ObGyns and other primary care providers in community-based settings
  • extending the Medicare Geographic Practice Cost Index floor, helping ensure access to care for women in rural areas
  • extending the Personal Responsibility Education Program to help prevent teen pregnancies and sexually transmitted infections.

Next steps
It’s very important that ObGyns and other physicians use these early years to understand and get ready for the new payment systems. ACOG is developing educational material for our members, and will work closely with our colleague medical organizations and the Department of Health and Human Services to develop key aspects of the law and ensure that it is properly implemented to work for physicians and patients.

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